]]>Stores can sell marijuana in Colorado and Washington but they can’t — for now — target potential customers on popular sites like Facebook, Twitter and Google. Despite the progressive reputations of these companies, they are keeping existing pot policies in place, frustrating the marijuana industry.

Taylor West of the National Cannabis Industry Association claims, for instance, that the trade group has tried to pay Facebook to “boost” certain stories — including ones that simply linked to pot-related reports in publications like the New York Times — but the social network refused.

“It’s pretty ridiculous and short-sighted – not to mention hypocritical – for them to leave those legitimate ad dollars on the table,” wrote West by email, adding that,”We are told that our posts “violate content guidelines” or something along those lines.”

This reluctance to accept marijuana advertising is surprising given that the product is legal and that it’s possible to target online ads to certain demographics and locations. For now, however, the internet companies appear to feel that pot ads would be more trouble than they’re worth:

“The risk of attempting to allow ads promoting the drug in certain states or countries where it is legal is too high (no pun intended) for us to consider at this time,” explained Facebook spokesman, Tim Rathschmidt, by email. He added that company policies do permit advocacy ads (ie “legalize it”), but not ones that promote the use of recreation drugs, including pot.

Google likewise confirmed that it is maintaining existing ad rules that include a ban on ads for “substances that can alter the function of the brain to induce unnatural euphoria, or alter reality, such as marijuana [and] cocaine.” Google does allow alcohol advertising, as does Facebook.

Both companies stated that they update their policies frequently so the marijuana policies could change.

In the meantime, AdWeek reported that “potrepreneurs” are also shut out of Twitter, but also states that the online advertising landscape could change dramatically if the companies update their policies and if pot advocates like Woody Harrelson and Snoop Dogg become celebrity endorsers.

]]>About.com announced on Tuesday that Neil Vogel, founder of the best-of-the-internet “Webby Awards,” will be the company’s new CEO. His immediate tasks will be to increase the site’s brand recognition and to persuade people to spend more time engaging with the content produced by About.com’s more than 900 expert “guides.”

Vogel arrives eight months after the New York Times Company sold About.com to IAC, an internet conglomerate best known for the Ask.com brand. Prior to the sale, About.com — which depends heavily on search for its traffic — suffered a drop in business when Google downgraded its content in its search algorithm.

In a phone interview, Vogel said the Google setback was overblown and About.com is humming along at a profitable pace on the basis of its traditional display and automated ad business. He also claimed that ad prices have stayed strong and that the existing “monetization model is very good.”

Vogel said his immediate plans are to grow traffic and to make the site flashier along the lines of BuzzFeed or Pinterest. He also says the site has great content but low name recognition.

“There’s clearly some design things to make this site more compelling,” he said, adding that there was a lot of potential on the “social side” but that the same social strategies don’t work for all content.

Whatever strategy Vogel chooses, he has no shortage of content with which to work. It will be interesting to see what a CEO with a show business streak does to spice up a website that covers everything from bankruptcy to baseball to Buddhism.

]]>Facebook’s approach to advertising can feel incoherent, especially when it flings random marketing messages all over a user’s page. In recent months, however, the social network has introduced tools that make its ad operation more sophisticated — and are likely to net it much more money.

News of the latest tune-up came on Tuesday as Facebook announced it will let marketers buy “sponsored stories” in a user’s News Feed on the basis of websites that the user has previously visited. Until now, Facebook only let brands buy stories based on a user’s profile — which is created from information the user told Facebook (age, location, “Likes” and so on).

The opportunity to use so-called “retargeting” is likely to be a hit with advertisers who regard ads based on a person’s browsing history to be especially effective and who consider Facebook’s news feed to be prime real estate. One industry executive told AdExchanger that News Feed response rates are 10 to 50 times higher than ads on the right side of the page.

Facebook also said it will be selling the News Feed through its FBX exchange, which is like an automated real-time auction house where advertisers bid to appear on your Facebook page. Until now, the tool was only available for Facebook’s right-hand ads.

Building an ad juggernaut

Opening up the News Feed for retargeting is likely to yield a nice cash boost for Facebook but, in the bigger picture, the move is part of a larger story of the company’s efforts to use different forms of data to build an all-knowing ad juggernaut.

Facebook is also, for instance, combining its own data with offline marketing information to help companies hone in on customers. As the New York Times reported, the clothing company JackThreads matched its database of two million customer emails against Facebook’s own email records — and found that two-thirds of them were on the social network. For Facebook, such opportunities are just the tip of the iceberg; the company is also working to tap into offline data on a large scale by partnering with loyalty card programs that collect drugstores and supermarket information.

All of this means that Facebook’s advertisers will be able to draw on three powerful sources of data (browsing history, offline data and Facebook records) in order to blast ads into one of the prime locations on the web — users’ News Feeds. For Facebook investors, this prospect is especially enticing given that this model can transfer nicely to mobile devices where users are spending more and more of their time. Facebook isn’t allowing marketers to buy mobile ads on its exchange just yet, but it’s a safe bet this will happen soon.

In short, Facebook appears well on its way to create a marketers’ paradise and a torrent of ad revenues. But there are still two factors that could scuttle these plans. The first is the familiar spectre of increased privacy regulation – but that is a threat Facebook and others like Google have so far swatted away successfully. Instead, the larger peril may be the prospect of too much advertising undermining Facebook’s user experience and its vaunted design. As this all-ads screenshot from today shows, Facebook still has a ways to go in cleaning up an ad experience that too often remains irrelevant and ugly:

]]>Wouldn’t it be nice if you could just wish something into existence? That’s what some in the media seem to be doing in hailing Yahoo’s latest earnings report as evidence of a comeback. Yes, the numbers were mildly better than predicted and the company’s star CEO sounded full of vim — but that doesn’t mean Yahoo’s position is any less hopeless than a year ago.

In case you missed it, Yahoo’s earnings came in at 32 cents a share yesterday which is better than the 28 cents that analysts had predicted. On the investor call following the earnings report, CEO Marissa Mayer stressed partnerships and the “tremendous internal transformation in the culture, energy and execution of the company.” She claims to have fixed hundreds of pressure points in the Yahoo bureaucracy and boasted that company employees worldwide are now enjoying free cafeteria food.

These are tactics, not a strategy. The reality is that Yahoo is still getting pummeled in its core business of display advertising and its search business, while posting higher revenue, is still losing market share. Despite some nifty content offerings (especially its finance and sports), the company is struggling for relevance in a world where no one says “portal” anymore. And while its stock is flying high, a big reason for that is Yahoo plowing money from asset sales into share buybacks.

To get an idea of where Yahoo stands, recall that the company was once regarded as an internet “giant” and that it stood astride the tech world like Apple and Amazon do today. Now, look at the chart below to see its relative significance today:

The other companies on the chart are not just other tech companies, but the companies with which Yahoo must compete directly. Google and Microsoft remain genuine giants while Facebook is still much smaller but, unlike Yahoo, is poised for powerful growth in the next two years. And, as my colleague Mathew Ingram noted, “partnering with everyone else is not a winning strategy.”

Mayer said on the investor call that Yahoo’s biggest opportunities lie in “search, display, mobile and video” but gave little indication how it would dislodge its immediate competitors — let alone the likes of Twitter, Tumblr and other upstarts.

The best that can be said for Marissa Mayer’s Yahoo is that the company is not outright dysfunctional. But it still needs a competitive advantage and a growth strategy. Until it has those things, let’s not waste our breath talking of a turnaround.

]]>Many online publishers spent last year fretting over how advertisers are paying less to display their messages beside news stories. Indeed, some say display ads should be declared dead altogether and replaced with “native advertising” that mimics a site’s editorial content.

This overstates the case. A better way to look at the situation is that it’s time for publishers to make better ads, and not to chuck the display format altogether. Check out, for instance, ESPN’s dynamic wall paper ad for an upcoming college football game that wraps around a story and lets viewers vote on their favorite team:

The ad, first reported by AdWeek, expands dramatically for those who click to vote but still does not take over the entire screen:

The football message, which also contains video and social media features, is effective compared to traditional banner ads because it’s less intrusive and is relevant to the surrounding content. One can imagine this formula working well for other genres like travel or food.

According to Marc Horine, VP of Revenue & Operations for ESPN, last year brought about a “creative renaissance” that is letting brands “break through the clutter of the traditional ad experience.” Horine also points to ESPN’s investment in technology that lets the site display elegant TV-like ads behind a story.

ESPN is hardly the only one making innovative ads, of course. Another example is OneSpot, a Texas firm that makes customized content for major retailers and inserts it in relevant places around the web. The result is a sort of hybrid between traditional display ads and the fully bespoke native advertising.

The new ad formats are promising, especially when paired with sophisticated analytics tools that let brands measure an ad’s ROI in real time. The one wildcard is whether nervous publishers will double down and invest in these promising new ad formats at a time when the larger online ad market is declining.

“This notion of content being here and commerce being there doesn’t really exist any more. Everyone has become a publisher,” Lerer Ventures partner and former Huffington Post CEO Eric Hippeau said Tuesday at Group Commerce’s Think Commerce conference in New York.

But, as content and commerce merge, he added that “it’s a lot easier for commerce brands to become publishers… than it is for people on the media side to add commerce.”

Historically, publishers have respected the line between “church and state,” separating editorial content from advertising and commercial content. Even Condé Nast’s Lucky fashion magazine, which is perfectly positioned for commerce, has not made the transition, he said. (Although the recently-launched iPad app does include direct links to products.)

And, it’s easy to understand why that bridge is difficult to cross. In addition to the cultural resistance against compromising an editorial identity with a commercial interest, e-commerce involves creating a whole new business model, with potentially new margin structures, customer service needs and other requirements.

How much credibility can commerce companies earn?

Interestingly, however, Philippe von Borries, co-founder of fashion and beauty site Refinery29 recently told Pandodaily that he thinks it’s commerce companies who have more challenges crossing over into publishing. “No one gives a shit about content from a commerce company,” he said, explaining that his is a media company that uses content to drive its commerce business. While media companies come from a place of credibility, he believes that any content from commerce companies will only be viewed as a kind of sophisticated marketing.

But while it’s true that a customer may never look to Warby Parker or Gilt Groupe for a position on, say, the fiscal cliff, it doesn’t mean that commerce companies can’t be credible purveyors of content within the verticals on which they focus. And, as Hippeau said, as social platforms turn everyone into some kind of publisher, the definition of “content” itself is changing, in turn altering what it means to be in the media business.

Thrillist: we’ve turned readers into buyers and vice versa

One company leading the way in the new world of content-meets-commerce is Thrillist and, at the Think Commerce conference, Ben Lerer, the company’s co-founder and CEO, said that more than half of Thrillist’s nearly $70 million annual revenue comes from Jack Threads, the e-commerce site it purchased in 2010.

“We’ve proven that we can turn a reader into a buyer,” he said. “We’re pleased that we can also turn a buyer into a reader.”

But despite Thrillist’s own success, he acknowledged not all media companies are as well positioned to cross into commerce. From its launch, Thrillist’s value proposition was a site that recommended ways in which young men should spend their time – an ideal starting point for a commercial relationship. But news and sports publishers, even those with engaged audiences, may have a more difficult time with commerce because their content isn’t recommendation or action oriented.

Shana Fisher, managing partner at High Line Venture Partners, said that while it can be tricky to focus on two revenue streams at once and that companies initially supported by advertising revenue (like nearly all media companies) may find it difficult to later ask customers for credit card information, more companies should blend revenue strategies based on content and commerce.

“In verticals that are transactional, the divide is really small,” she said, highlighting food and fashion. “If it’s not related to something that’s transactional, it’s more abstract.”

]]>People are fed up with obnoxious internet ads that promise “weird tricks” for flat bellies. These ads, which deliver no value to publishers or consumers, have led some to declare that it’s time to do away with the banner ad format altogether. Others call for a less radical solution and say the problem is not the ad format but the content.

OneSpot is in the latter camp. The Texas-based ad firm, which has clients like Dell and Home Depot, believes the banner ad problem can be fixed and points to its easy-to-use technology as a way to do so. In a nutshell, OneSpot offers a rapid way for brands to create ads from pre-existing content — reviews, white papers, slides and so on — and display them in high value settings for a good price through the help of ad exchanges.

In practice, this might mean that an ice cream chain selects a piece of content it controls — perhaps a company blog post or a video or a newspaper review. With the help of OneSpot, the ice cream chain zaps that content into the form of an ad and place it on sites where ice cream fans are likely to be. The advantage of this approach, rather than randomly spraying an ad around the internet, is that target customers are likely to engage with the advertiser because the ad is content they care about.

To explain it another way, OneSpot’s method lets brands take advantage of the fact that many online ad slots are now being filled with dirt cheap junk like this…

.. and replace them with quality ads for a low price. Here is an example of the OneSpot approach, where a piece of content called “Desert Survival” has been packaged into an ad — the advertiser, hoping that Outside readers will be interested in the content, has paid to place it (through an automated ad exchange) on the top right of the Outside page:

One big upside to this approach for advertisers is the chance to hand over the task of ad buying to OneSpot. Doing so spares them the dizzying task of working with ad exchanges to place the ad content themselves. OneSpot also gives advertisers a way to keep tabs on their campaign with real-time analytics; the advertisers can employ A/B testing to tweak their campaigns and measure ROI.

While there are a flurry of companies making big claims about changing the ad game, OneSpot appears to be the real deal. It has been working with major retailer clients since March and received $1.5 million in funding from investors that include RSL Venture Partners and 500 Startups. I sat down last week with founder and CEO, Matt Cohen, who explained his view on the ad industry:

“Advertising is a business model, not a type of content … It’s when one party buys attention from another,” Cohen said, arguing that “interruptive content” fails and leads to banner blindness.

The most intriguing aspect of Cohen’s model is that it appears to be a hybrid of bespoke “native advertising” which is being hailed as the way of the future, and the existing display advertising business that is still popular because it scales so easily. OneSpot-served ads also come with Twitter and Facebook buttons that make them easier to share (another increasingly essential element of online marketing).

If the OneSpot model catches on, it will increase pressure on advertisers to find quality content and, at the same time, benefit writers and other content creators. It may also reinvigorate the sagging display ad market by replacing worthless “lose your belly” ads with more valuable ad content.

While the overall U.S. display ad market is expected to grow 21.5 percent to $14.98 billion this year, eMarketer estimates that RTB spending will grow 98 percent to reach $1.9 billion in 2012. By 2015, the firm projects that spending on RTB could climb to $5.8 billion.

Several factors — including an influx of video and mobile inventory, an expected increase in the availability of premium ad inventory and overall demand for more transparency — are projected to fuel that growth, eMarketer said. But the firm said Facebook’s ad exchange, FBX, which it launched in September, is expected to play a key role in the rise of RTB.

Through the platform, advertisers can target ads to Facebook users based on their general web browsing history. In a recent conversation with Adweek, Rob Norman, chief digital officer at GroupM, said he believed that FBX had already “quadrupled” the market for advertisers interested in buying through real-time bidding.

Clark Fredricksen, eMarketer’s vice president of communications, said it’s unclear exactly how much Facebook’s ad exchange will drive future RTB growth. But he said that if just 10 percent of Facebook’s projected $5.5 million in ad revenue in 2013 were to go through the exchange, it would increase real-time bidding’s share of ad spending by 1.5 percent.

“Even the slightest investment in FBX from advertisers could significantly effect the growth of RTB overall,” he said. “The growth of Facebook’s ad exchange will be highly influential.”

]]>During an investor call following Yahoo’s Q3 earnings report Monday afternoon, Marissa Mayer, the company’s new CEO and a former Google exec, outlined her vision for the company going forward. “We’ll become a growth company by inspiring and delighting our users,” Mayer said, borrowing a cliche from the modern startup playbook. Here are five things that she’s focusing on:

Turn Yahoo into a mobile company

“Yahoo hasn’t capitalized on the mobile opportunity,” Mayer said: Yahoo has “underinvested in” mobile, “splintered our brand” and has “more than 76 apps across Android and iOS. All of this needs to change,” because mobile is “a fundamental and massive platform shift that we have to ride and participate in in order to be relevant.” So a “focused, coherent mobile strategy” is the company’s “top priority.”

Mayer says Yahoo has a good foundation in mobile, citing the most frequent uses of smartphones: “Checking the weather, checking sports scores, stocks and financial info, watching videos, sharing photos, getting the latest news, playing games. Does that sound like any particular company that you know? Yahoo, with its content and leadership in these key verticals, is already very well-positioned here.”

Search or display? Both

Asked whether search or display is a bigger priority for Yahoo, Mayer first said “there is potentially more upside in search” because “the content investment we’ve made yields so many impressions and page views.” But then she said “given the trend toward audience-based buying in the advertising space, the display opportunity is particularly compelling.” She said that advertisers tell her “the way audiences tend to congregate on Yahoo is unique” and “we have a great segmentation of audience already,” whereas competitors are either “much less granular or more granular.”

She wants to compete with Google on search share: “There are a few large players and Yahoo should be one.”

Find content and tech partners

Don’t expect “a giant pivot,” Mayer said. Rather, she wants to focus on “improved execution and seeing the opportunities that are already apparent in our business.” Yahoo should be “a terrific compoany to partner with, not only for our advertisers but for other technology companies…We don’t have as much channel conflict with other players in technology as many comparable companies.” So they’ll partner with “browsers, social networks, mobile operating systems.” She later said “one of the advantages here is we don’t have a mobile operating system” so the company will “provide our products across all the different platforms.”

Make more small acquisitions

“One of the things lost on people is that because so many high-profile tech acquisitions are above the $1 billion mark, people tend to think all are in that space,” Mayer said. “Many and most are less than $100 million” and she’s overseen “20 or so” of those over her career. So “we’re looking for smaller-scale acquisitions that align well overall with our business…the size and scale that’s comfortable for a great integration and great product coming out of it are…in size and scale of double-digit millions and low hundreds of millions.”

Selective international and local expansion

Yahoo has to “bring a coherence to our offerings across different markets” and “narrow it,” Mayer said. The company pulled out of South Korea on Friday. “We had a hard time finding a growth story moving forward” in Korea, Mayer said. But “Korea has been an unusual exception…we will stay where we see opportunities for growth on desktop or mobile” and “withdraw where we don’t see growth.”

“I really do love” local, Mayer said, but she has “a deep respect that it’s very hard to do it well. It requires deep investment, a lot of people, energy and time to build terrific listings.”

In a blog post today, the social network is set to announce that its new exchange – which allows advertisers to target ads to Facebook users based on their general web browsing history – is opening out of a beta test period involving more than a dozen demand-side platforms (DSPs) and a limited number of brand advertisers.

Through the new exchange, Facebook and its partners use cookies to track user web browsing behavior and then serve up related ads on Facebook. For example, if you go to a travel site to search for a flight but then don’t complete the booking, the Facebook Exchange makes it possible for the travel site to bid in real-time for the opportunity to show you a relevant ad when you return to Facebook.

Partners report increased ROI for Facebook Exchange advertisers

Zach Coelius, CEO and co-founder of Triggit, one of the partners, said that although Facebook has come under recent scrutiny as an effective ad platform, from his observation, Facebook’s ads are well-placed and attract a strong level of engagement from users.

“Facebook as a platform has gotten a bum rap,” said. “But we’ve never seen anything as good as this.”

In the three-month test period, Triggit found that ads served through the Facebook Exchange generated an average of four times the return on ad spending compared to traditional display retargeting and resulted in a click-through conversion rate that was 2.2 times higher. The cost per click-through order for Facebook Exchange ads was also 6.5 times lower, the company said.

While ads served through traditional RTB display are typically just seen by consumers when they return from work, during their leisure hours, Triggit found that Facebook Exchange ads are more consistently seen throughout the day. Their data also show that conversions on the Facebook exchange are twice as likely to happen in the first two days than they are on traditional display.

While the volume of ads served at the beginning was small, Coelius said, Facebook rolled out a full-scale RTB (real-time bidding) exchange faster than anyone else Triggit has worked with.

Other partners also report strong results. New York-based AppNexus said advertisers who worked with its client Accordant Media, a digital media buying and optimization firm, were able to increase their reach through the Facebook Exchange while reducing their cost per action by as much as 25 percent. Advertisers with business marketing firm Bizo were able to increase audience reach by 30 percent while maintaining impression and conversion rates, AppNexus said.

Still early days

Retargeting platform AdRoll said that, on average, Facebook Exchange advertisers saw an average Return on Investment of 16X, which is on par with standard display advertising channels.

Adam Berke, AdRoll’s president, said that while his clients had positive experiences with the new exchange it’s still too early to make conclusive generalizations given how different Facebook’s inventory is and how differently advertisers bid on its platform.

“It’s so early in the roll-out of the exchange,” he said. “Anyone who feels like they have a fully-baked Facebook Exchange product and knows exactly how it performs is probably coming to conclusions a little too soon.”

For Facebook, which has seen its stock price lose nearly half its value since going public in May (the stock got a bump this week after CEO Mark Zuckerberg’s first public interview), the new exchange could be a critical way for the company to show its value as an ad platform and earn revenue.

Last month, amid reports of underperformance through the first half of 2012 and questions about the effectiveness of some of its ad products, eMarketer, cut its 2012 revenue projections for Facebook from $5 billion to just over $4 billion.